While shippers have been warned that low-sulphur regulations to be enforced globally in 2020 will see bunker costs added to their freight bill, they could also face a huge upswing in freight rates if new proposals to cut vessel speeds, due to be discussed at the International Maritime Organization (IMO), turn into regulation.
At this week’s TPM conference in Long Beach, World Shipping Council (WSC) vice president Bryan Wood-Thomas said the IMO would next month meet to discuss curbs on greenhouse gas (GHG) emissions from shipping – and potentially the enforced reduction of ship speeds.
Shipping consultant Franck Kayser, until recently chief operations officer at CMA CGM, said his “coffee pot” prediction was that if speed limits were enforced – reductions of 10-30% – shippers could be faced with freight rates increasing 25-30% and bunker adjustment factors (BAFs) rising 50%.
“If speed restrictions come in, that will require a huge increase in the number of vessels required to fulfil existing cargo volumes, and demand will outstrip supply.
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